All You Need To Know Going Into Trade On July 8
Asian markets are mixed in early trade after benchmarks on Wall Street declined on renewed concerns over the economic impact of Covid-19.
The U.S. Dollar and treasuries are holding on to gains while oil prices have dipped.
The Singapore-traded SGX Nifty, an early indicator of the Nifty 50 Index’s performance in India, rose 0.5% to 10,810 as of 6:45 a.m.
Short on time? Well, then listen to this podcast for a quick summary of All You Need To Know before the opening bell.
Let’s take a look at the factors that can influence equities in today’s session:
- Markets in Japan and Australia are retreating while those in South Korea are edging higher.
- Benchmark indices in the U.S. ended lower with the S&P 500 seeing six shares falling for every one that gained. Nasdaq dropped from a record intraday high with airlines and hotels underperforming.
- Futures on the Dow Jones are trading higher by 90 points
- Trump administration officials continue to mull proposals to punish China for their recent moves on clamping down on freedoms in the British colony.
- Atlanta Fed President Raphael Bostic said renewed spread of Covid-19 may threaten the pace of recovery as businesses, consumers put plans on hold.
- Euro Area officials forecast the economy to contract 8.7% this year, a full percentage point lower than previously predicted.
- EIA crude oil inventory report will be released today.
- Yield on the 10-year treasury stood at 0.64%.
- West Texas Intermediate crude fell 0.6% to $40.39 per barrel.
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Companies With Quarterly Business Updates
- Complete loss of sale in April due to the lockdown.
- 83% stores re-opened across all businesses.
- Revenue in May and June for Jewellery was 20% and 70% respectively as compared to corresponding months o fthe previous year.
- Sold gold worth Rs 610 crore in the bullion market.
- Recovery better than envisaged due to higher share of wedding jewellery sale, good sales from GHS scheme and investment led demand.
- Added six Tanishq and one Mia store on a net basis.
- Revenue for watches and wearables business was at 5% and 20% respectively in May and June as compared to the previous year.
- Recovery rate in sales was highest in e-commerce and retail channels.
- Revenue for Eyewear business in May and June was 15% and 35% compared to the previous year.
- Closed 15 eyewear stores during the quarter on a net basis
- Cement production down 16% to 4.65 lakh tonnes
- Cement dispatches down 12% to 4.84 lakh tonnes
- Cement boards production down 26% to 12,570 tonnes
- Cement boards dispatches down 47% to 8,075
- RMC production and sales down 44%
- Physical performance in terms of production and dispatches adversely impacted due to Covid-19
Stocks To Watch
- Yes Bank: Capital raising committee approves fund raising through a follow on public offer (FPO). Bloomberg on June 17 had reported that the bank looks to raise around $1 billion through this public offer.
- Adani Ports and SEZ: Board approved raising up to $1.25 billion via dollar denominated foreign currency bonds.
- Maruti Suzuki: Production levels in June stood at 50,742 units from 1,11,917 units, on a year-on-year basis.
- CRISIL: NCLT approves scheme of arrangement between the company and CRISIL Ratings. The scheme involves transfer of CRISIL's business to CRISIL Ratings to ensure compliance with the revised norms introduced by SEBI. The ratings business will be segregated into CRISIL Ratings as a going concern through a slump sale. Appointed date for the scheme is January 1, 2020. CRISIL will be dissolved without winding up post the completion of the process.
- Bharti Airtel: Launches new prepaid pack with content from ZEE5. Prepaid bundle is valued at Rs 289 for a month and a Rs 79 top-up. It offers subscription of the entire ZEE5 catalogue for 30 days.
- CEAT: Jwalamukhi Investments reduced stake to 8.72% from 10.92% till July 6.
- Coal India: Clarifies that the unions resorted to strike from 1st shift of July 2 to the 3rd shift of July 4. Normalcy has been restored from July 5.
- Birlasoft: Announced its partnership with Innoveo for digital solutions.
- J&K Bank: RBI extends term of Chairman and Managing Director RK Chhibber by three more months, starting July 10.
- Suzlon Energy: Total default amount stood at Rs 8,292.1 crore as on June 30, and total outstanding from banks and financial institutions were at Rs 13,185.5 crore, as per the restructured resolution plan.
- Covid-19 Impact On Valiant Organics: Experiencing gradual pick-up in demand for its products post commencement of operations. There are some challenges, as regards to sales seen for products used in the dyestuff industry.
- BEML: Board has approved closure of its loss making arm Vignyan Industries.
- Ineos Styrolution: Exchanges have issued their in-principle approval for the delisting offer.
- Reporting Earnings Today: Dish TV, Kokuyo Camlin, South Indian Bank (For Q2FY20)
Earnings Reported After Market Hours
Shree Renuka Sugars Q4FY20
- Revenue down 2.9% to Rs 1,374.8 crore
- Net loss widens to Rs 145.2 crore from Rs 23.2 crore
- Ebitda up 10.3% to Rs 139.6 crore
- Ebitda margin at 10.2% from 8.9%
- Forex gain of Rs 130.4 crore this quarter
- Exceptional loss of Rs 96 crore in base quarter
- Deferred tax of Rs 52.4 crore as compared to tax reversal of Rs 6.2 crore last year
- Other income of Rs 114.4 crore in base quarter
- Raw Material cost as a percentage of sales at 77.5% from 79.7%
- All numbers are consolidated and compared on a year-on-year basis
CLSA On Titan
- Sell rating maintained
- Price target of Rs 855
- Expect to be late-cycle beneficiary
- Build-in a 62% and 75% drop in overall revenue and Ebitda for Q1FY21
- Rebounded on expectations of recovery in business
- Has undertaken aggressive cost saving measures
Macquarie On Titan
- Outperform rating maintained
- Price target of Rs 1,123
- Current crisis provides significant market share gain opportunity
- Gold gaining traction as an asset class can be a big growth option for Tanishq
- Presence in omni channel and better store hygiene
- Offline sales impacted but online channels did well
BofA Securities On Vodafone Idea
- Underperform rating maintained
- Price target of Rs 7.5
- Continue to see headwinds that can limit any near to medium-term re-rating
- Expect revenue momentum to continue to remain weak as it loses market share
- High AGR fine and no immediate tariff hike to impact capex
- Focus on cash conservation may further accentuate market share loss
- May eventually need a cash call given its high gearing
- Concerns remain on long-term sustainability
- Will need to invest if it wishes to avoid competitive disadvantage as 5G rollout is still 2-3 years away
HSBC On Aster DM Healthcare
- Buy rating maintained
- Price target cut to Rs 168 from Rs 194
- Trades at significant discount to EM peers
- Discount unwarranted considering potential improvements in free cash flows
- Disruptions from Covid-19 will put pressure on earnings in the short-term
- Expect a recovery in H2FY21
- Re-rating story remains intact for the medium-term
- Cut price target to reflect changes to estimates
Pledged Share Details
- Bajaj Electricals: Promoter Vanraj Bajaj invoked pledge of 18.44 lakh shares on July 3
- Adani Enterprises: Promoter SB Adani Family Trust revoked pledge of 1.12 crore shares between July 4-6
- Jindal Steel & Power: Promoter revoked pledge of 37 lakh shares between July 3-6
- JSW Energy: Promoter Indusglobe Multiventures revoked pledge of 1.5 crore shares on July 2-3
- MEP Infra Developers: Promoter AJ Tolls created pledge of 10 lakh shares on July 3
(As Reported On July 7)
- CG Power and Industrial Solutions: Yes Bank sold 43 lakh shares (0.69%) at Rs 10.75 per share.
- Best Agrolife: Aviator Global Investment Fund acquired 1.12 lakh shares (1.4%) at Rs 464 per share.
- KDDL: Jupiter India Fund acquired 2.67 lakh shares (2.29%) at Rs 152.5 per share and Alchemy Capital (Euro) sold 3.09 lakh shares (2.65%) at Rs 152.5 per share.
Who’s Meeting Whom
- Mahanagar Gas: To meet Fidelity International on July 9
- Inox Leisure: To meet SAIF Partners on July 8
- AGM Date: L&T Technology Services, Wipro, Onward Technologies, Mayur Uniquoters
- Fund Raising Date: ICICI Bank
- Price Band Revised From 10% To 5%: Camlin Fine Sciences
- Price Band Revised From 20% To 10%: IRB Infrastructure Developers, ITI, Tera Software
- Move Into ASM Framework: Omfurn India
- Move Into Short-Term ASM Framework: Cimmco, Chamanlal Setia Exports
- Move Out Of Short-Term ASM Framework: Megasoft, Future Retail, Future Enterprises, Hilton Metal Forging, Future Enterprises, Tribhovandas Bhimji Zaveri.
Money Market Update
- The currency ended weak for the second day in a row.
- The rupee ended at 74.94 against the U.S. Dollar as compared to Monday's close of 74.68.
- Rupee was the worst performing Asian currency for the second day.
- Nifty July futures closed at 10,767; discount widens to 34 points from 10 points
- Nifty July futures add 4% and 4.5 lakh shares in Open Interest
- Nifty Bank July futures closed at 22,603; premium of 25 points from 28 points
- Nifty Bank July futures add 9.7% and 1.2 lakh shares in Open Interest
- Nifty Put-Call Ratio at 1.63 from 1.59 across all series
- Exit F&O Ban: SAIL, Vodafone Idea
- Stocks In F&O Ban: BHEL, Equitas, Glenmark, Indiabulls Housing Finance, Equitas
Nifty Monthly Expiry: July 9
- Maximum Open Interest on Call side at 11,000 strike (33.4 lakh shares)
- Maximum Open Interest on Put side at 10,000 strike (38.9 lakh shares)
- Active Options: 10,500 Put (+4 lakh shares) and 10,800 Call (+8.7 lakh shares)
Nifty Monthly Expiry: July 30
- Maximum Open Interest on Call side at 11,000 strike (22.4 lakh shares)
- Maximum Open Interest on Put side at 10,000 strike (32 lakh shares)